Risk and return of Indian information technology stocks: beta, growth and decent work-driven economic growth
Year: 2026
Type: article
Abstract: Information technology (IT) services are a core engine of India's decent work and economic growth agenda, yet retail investors face a crowded sector in which the relationship between risk and reward is rarely quantified at the firm level. This study examines the systematic risk and share-price growth of twelve IT services and consulting companies listed on the Bombay Stock Exchange (BSE) and tests whether higher market risk was rewarded with higher growth. The study employs monthly closing prices of the twelve stocks and the BSE Sensex for the 36 months from April 2019 to March 2022, from which monthly returns, market-model betas, and three-year compound annual growth rates (CAGR) are computed and compared using one-sample t-tests, Wilcoxon signed-rank tests, and Pearson and Spearman correlations. The results show that eleven of the twelve stocks had a beta below one (mean 0.886, median 0.863, range 0.470–2.008), with KPIT Technologies the sole aggressive stock (β = 2.008); the sample mean CAGR of 21.57% exceeded the Sensex CAGR of 14.49% (t = 5.97, p < 0.001), and the cross-sectional correlation between beta and CAGR was close to zero (r = 0.007, p = 0.983; ρ = 0.189, p = 0.557). The findings suggest that Indian IT stocks behaved as defensive, below-market-risk securities that nonetheless outgrew the market by about seven percentage points per year, that firm-level growth was not proportional to beta, and that Wipro (β = 0.470) and TCS (β = 0.506) delivered the most growth per unit of systematic risk, supporting sustainable investment in industry, innovation and infrastructure. JEL Classification Codes: G11, G12, G32, L86, O16.
Authors: Sridhar H S, Anupama Sundar D
Institution: JSS Science and Technology University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7225449108